PR Newswire | Jan 25, 2022 07:02AM EST

Dividend by 5%

01/25 06:00 CST

Cambridge Bancorp Announces Record Operating Results for 2021 and Increases Dividend by 5% CAMBRIDGE, Mass., Jan. 25, 2022

CAMBRIDGE, Mass., Jan. 25, 2022 /PRNewswire/ -- Cambridge Bancorp (NASDAQ: CATC) (the "Company"), the parent company of Cambridge Trust Company (the "Bank"), today announced unaudited net income of $54.0 million for the year ended December 31, 2021, an increase of $22.1 million, or 69.0%, as compared to net income of $32.0 million for the year ended December 31, 2020. Diluted earnings per share were $7.69 for the year ended December 31, 2021, representing a 52.9% increase as compared to diluted earnings per share of $5.03 for the year ended December 31, 2020.

The results for the years ended December 31, 2021 and December 31, 2020 include non-operating items as detailed in a table below. Operating net income excluding these items was $54.8 million for the year ended December 31, 2021, an increase of $11.0 million, or 25.0%, as compared to operating net income of $43.9 million for the year ended December 31, 2020. Operating diluted earnings per share were $7.81 for the year ended December 31, 2021, representing a 13.2% increase as compared to operating diluted earnings per share of $6.90 for the year ended December 31, 2020.

For both quarters ended December 31, 2021 and September 30, 2021, unaudited net income was $13.3 million. Diluted earnings per share were $1.88 for the quarter ended December 31, 2021, representing a 1.0% decrease as compared to diluted earnings per share of 1.89% for the quarter ended September 30, 2021.

Operating net income for the quarter ended December 31, 2021 was $13.5 million, a decrease of $386,000, or 2.8%, as compared to operating net income of $13.9 million for the quarter ended September 30, 2021. Operating diluted earnings per share were $1.92 for the quarter ended December 31, 2021, representing a 2.5% decrease as compared to operating diluted earnings per share of $1.97 for the quarter ended September 30, 2021.

2021 Highlights

* Financial performance ratios for the year ended December 31, 2021, were strong with Operating Return on Average Assets ("ROA") of 1.26% and Operating Return on Tangible Common Shareholders' Equity ("ROTCE") of 15.10%. * Core deposit growth of $1.02 billion, or 32.4%, from December 31, 2020. * Total loans, excluding loans under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"), increased by $267.4 million, or 8.8%, to $3.30 billion at December 31, 2021 from $3.03 billion at December 31, 2020. * Positive wealth management net asset flows of $89.8 million. * Asset quality at December 31, 2021, remained excellent with ratios of non-performing loans to total loans and non-performing assets to total assets at 0.16% and 0.11%, respectively. * Tangible book value per share at December 31, 2021 increased to $55.01 from $50.07 at December 31, 2020.

"The Cambridge Trust Team delivered strong performance in an extraordinary year. The commitment of my colleagues to meet client needs has shown through in financial performance and otherwise," noted Denis K. Sheahan, Chairman and CEO.

Balance Sheet

Total assets increased by $942.2 million, or 23.9%, from $3.95 billion at December 31, 2020 to $4.89 billion at December 31, 2021.

Total loans increased by $165.5 million, or 5.2%, from $3.15 billion at December 31, 2020 to $3.32 billion at December 31, 2021. Excluding PPP loans, total loans increased by $267.4 million, or 8.8%, from December 31, 2020.

* Residential real estate loans increased by $116.2 million, from $1.30 billion at December 31, 2020, to $1.42 billion at December 31, 2021. * Commercial real estate loans increased by $152.0 million, from $1.36 billion at December 31, 2020, to $1.51 billion at December 31, 2021. * Commercial and industrial loans, excluding PPP loans, increased by $23.6 million, from $223.7 million at December 31, 2020, to $247.2 million at December 31, 2021. * PPP loans were $22.2 million and $124.2 million at December 31, 2021 and 2020, respectively, and are included in commercial and industrial loans on the consolidated balance sheets.

The Company's total investment securities portfolio increased by $690.2 million, or 142.4%, from $484.7 million at December 31, 2020, to $1.17 billion at December 31, 2021, as the Company invested excess cash.

Total deposits increased by $928.1 million, or 27.3%, to $4.33 billion at December 31, 2021, from $3.40 billion at December 31, 2020.

* Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $1.02 billion, or 32.4%, to $4.17 billion at December 31, 2021, as a result of growth from new and existing client relationships. * The cost of total deposits was 0.15% for the quarter ended December 31, 2021, and 0.11% for the quarter ended September 30, 2021. The cost of total deposits for the year ended December 31, 2021, was 0.13%, as compared to 0.25% for the year ended December 31, 2020, a reduction of 12 basis points. At December 31, 2021, the spot cost of deposits was 0.18%.

Net Interest and Dividend Income

Net interest and dividend income, before the provision for (release of) credit losses, decreased by $648,000, or 2.0%, to $31.8 million for the quarter ended December 31, 2021, from $32.4 million for the quarter ended September 30, 2021. This decrease was primarily due to lower loan fair value accretion and PPP loan income recognized on PPP loans forgiven by the SBA during the period.

For the year ended December 31, 2021, net interest and dividend income, before the provision for (release of) credit losses, increased by $7.7 million, or 6.4%, to $128.0 million as compared to $120.2 million for the year ended December 31, 2020. This increase was primarily due to higher interest on investment securities, higher PPP loan income recognized on PPP loans forgiven by the SBA during the year, and a lower cost of funds partially offset by lower loan accretion associated with merger accounting and lower yields on interest-earning assets during the period.

The Company's net interest margin on a fully taxable equivalent basis decreased by 26 basis points to 2.84% for the quarter ended December 31, 2021, as compared to 3.10% for the quarter ended September 30, 2021.

The Company's net interest margin on a fully taxable equivalent basis decreased by 53 basis points to 3.12% for the year ended December 31, 2021, as compared to 3.65% for the year ended December 31, 2020.

In order to provide greater disclosure of the impact of loan related merger accounting and the impact of the SBA's PPP loan program, a reconciliation of the Company's net interest margin, on a fully taxable equivalent basis, to an adjusted net interest margin, on a fully taxable equivalent basis, is shown below. Excluding the impact of merger related loan accretion and the impact of PPP loans, the adjusted net interest margin, on a fully taxable equivalent basis, for the quarter ended December 31, 2021, was 2.70%, representing a 22 basis point decrease from the adjusted net interest margin, on a fully taxable equivalent basis, of 2.92% for the quarter ended September 30, 2021, due to the success of our deposit gathering efforts and the corresponding reinvestment of those funds into investment securities.

Three Months Ended

December 31, 2021

Average Interest Rate Balance Income/ Earned/ Expenses Paid

(dollars in thousands)

Total interest-earning assets (GAAP) $4,469,285

Net interest income on a fully taxable $32,016 equivalent basis (GAAP)

Net interest margin on a fully taxable 2.84 %equivalent basis (GAAP)

Less: Paycheck Protection Program loan (37,615) (1,213)-0.08%impact

Less: Accretion of loan fair value (629) -0.06%adjustments

Adjusted net interest margin on a fully $4,431,670$30,174 2.70 %taxable equivalent basis

Less: Excess cash impact (1) (121,461) (46) 0.07 %

Normalized adjusted net interest margin on $4,310,209$30,128 2.77 %a fully taxable equivalent basis

(1) Excess cash represents the estimated amount of average cash on the balance sheet that is above normal levels.

Excluding the impact of merger related loan accretion and the impact of PPP loans, the adjusted net interest margin, on a fully taxable equivalent basis, for the year ended December 31, 2021, was 2.93%, representing a 43 basis point decrease from the adjusted net interest margin, on a fully taxable equivalent basis, of 3.36% for the year ended December 31, 2020, due to the low interest rate environment.

Year Ended

December 31, 2021

Average Interest Rate Balance Income/ Earned/ Expenses Paid

(dollars in thousands)

Total interest-earning assets (GAAP) $4,127,863

Net interest income on a fully taxable $128,954 equivalent basis (GAAP)

Net interest margin on a fully taxable 3.12 %equivalent basis (GAAP)

Less: Paycheck Protection Program loan (102,979) (6,089)-0.07%impact

Less: Accretion of loan fair value (4,771)-0.12%adjustments

Adjusted net interest margin on a fully $4,024,884$118,0942.93 %taxable equivalent basis

Less: Excess cash impact (1) (88,651) (133) 0.07 %

Normalized adjusted net interest margin on a fully taxable equivalent $3,936,233$117,9613.00 % basis

(1) Excess cash represents the estimated amount of average cash on the balance sheet that is above normal levels.

Provision for Credit Losses

During the quarter ended December 31, 2021, the Company recorded a release of the provision for credit losses of $273,000, as compared to a provision for credit losses of $86,000 for the quarter ended September 30, 2021, as a result of improving forward-looking economic assumptions and the resulting decrease in loss expectations in the Company's allowance for credit losses modeling.

For the year ended December 31, 2021, the Company recorded a release of the provision for credit losses of $1.3 million, as compared to a $18.3 million provision for credit losses for the year ended December 31, 2020, which included $9.3 million associated with the expected impact of the COVID-19 pandemic on future loan losses and $8.6 million for the recognition of the non-operating impact of merger related CECL accounting.

Noninterest Income

Total noninterest income increased by $339,000, or 3.0%, to $11.5 million for the quarter ended December 31, 2021, as compared to $11.1 million for the quarter ended September 30, 2021. This change was primarily the result of higher prepayment premiums on commercial loans and higher loan related derivative income during the quarter partially offset by a decrease in wealth management revenue. Noninterest income was 26.5% of total revenue for the quarter ended December 31, 2021.

* Other income increased by $366,000, or 97.6%, to $741,000 for the fourth quarter of 2021, as compared to $375,000 for the third quarter of 2021, primarily due to a $264,000 increase in prepayment premiums on commercial loans. * Loan related derivative income increased by $106,000, or 27.2%, to $496,000 for the fourth quarter of 2021 as compared to $390,000 for the third quarter of 2021 primarily due to increased loan volume. * Wealth management revenue decreased by $213,000, or 2.3%, to $9.0 million for the fourth quarter of 2021, as compared to $9.2 million for the third quarter of 2021, primarily as a result of seasonal tax fee revenue in the prior quarter, partially offset by appreciation within the equity markets. Wealth Management Assets under Management and Administration were $4.9 billion at December 31, 2021, an increase of $346.9 million, or 7.7%, from September 30, 2021, primarily due to appreciation within the equity markets and positive net client asset flows.

Total noninterest income increased by $4.8 million, or 12.1%, to $44.3 million for the year ended December 31, 2021, as compared to $39.5 million for the year ended December 31, 2020. This change was primarily a result of increases in wealth management revenue and loan related derivative income partially offset by decreases in gain on loans sold and deposit account fees. Noninterest income was 25.7% of total revenue for the year ended December 31, 2021.

* Wealth management revenue increased by $5.3 million, or 17.8%, to $35.0 million for the year ended December 31, 2021, as compared to $29.8 million for the year ended December 31, 2020, primarily due to appreciation within the equity markets and positive net client asset flows. * Loan related derivative income increased by $645,000, or 43.6%, to $2.1 million for the year ended December 31, 2021, as compared to $1.5 million for the year ended December 31, 2020, due to increased loan volume combined with fair value adjustments. * Gain on loans sold decreased by $1.0 million, or 55.0%, to $832,000 for the year ended December 31, 2021, as compared to $1.9 million for the year ended December 31, 2020 due to decreased sales of residential mortgages. * Deposit account fees decreased by $656,000, or 25.3%, to $1.9 million for the year ended December 31, 2021, as compared to $2.6 million for the year ended December 31, 2020, primarily due to a decrease in fee revenue from commercial deposit sweep products as a result of lower interest rates.

Noninterest Expense

Total noninterest expense remained stable at $25.5 million for both the quarters ended December 31, 2021 and September 30, 2021. During the quarter ended December 31, 2021, there were decreases in non-operating expenses and salary and employee benefits expense partially offset by increases in data processing costs and higher FDIC insurance premiums, as compared to the quarter ended September 30, 2021.

* Non-operating expenses decreased by $456,000, or 57.9%, primarily driven by one-time branch closure and relocation expenses recorded during the third quarter, partially offset by costs associated with contract termination fees as a result of the wealth management system conversion completed during the fourth quarter. * Salary and employee benefits expense decreased by $189,000, or 1.2%, primarily due to an adjustment in performance-based compensation partially offset by new staff additions to support business initiatives. * Data processing fees increased by $512,000, or 25.0%, primarily due to higher costs associated with the Company's new wealth management system implemented during the fourth quarter combined with increased client usage of our existing bank systems. * FDIC insurance increased by $111,000, or 36.4%, primarily due to balance sheet growth during the quarter.

Total noninterest expense increased by $2.4 million, or 2.4%, to $100.5 million for the year ended December 31, 2021, as compared to $98.1 million for the year ended December 31, 2020, primarily driven by increases in salaries and employee benefits expense, professional fees, data processing fees, and occupancy and equipment expense, partially offset by a decrease in non-operating expenses.

* Salaries and employee benefits expense increased by $6.2 million, or 10.4%, primarily related to the full year impact of the merger with Wellesley Bancorp, Inc. ("Wellesley") in the second quarter of 2020, additions to support business initiatives, normal merit increases, and increases in employee benefit costs. * Professional services increased by $1.2 million, or 28.7%, primarily due to increased consulting fees associated with the wealth management system conversion completed in the fourth quarter of 2021 and employment agency costs. * Data processing fees increased by $1.2 million, or 15.2%, primarily due to the full year impact of new client usage of our banking systems as a result of our merger with Wellesley and higher data processing fees associated with the wealth management system conversion completed during the fourth quarter of 2021. * Occupancy and equipment expense increased by $894,000, or 6.9%, primarily as a result of the full year impact of additional branches and office space arising from the merger with Wellesley. * Non-operating expenses decreased by $6.5 million, or 85.3%, primarily due to one-time non-operating costs associated with the Wellesley merger that were incurred in 2020, partially offset by previously communicated branch closures and relocation expenses and system conversion expenses.

Asset Quality

Non-performing loans totaled $5.4 million, or 0.16% of total loans outstanding, at December 31, 2021. The allowance for credit losses was $34.5 million, or 1.05% of total loans outstanding excluding PPP loans, at December 31, 2021, as compared to $35.2 million, or 1.09% of total loans outstanding excluding PPP loans, at September 30, 2021.

The Company recorded net loan recoveries of $13,000, or 0.00% of total loans (annualized), for the quarter ended December 31, 2021, as compared to net loan recoveries of $76,000, or 0.00% of total loans (annualized), for the quarter ended September 30, 2021.

Net loan recoveries were $155,000, or 0.00% of total loans, for the year ended December 31, 2021, as compared to net charge-offs of $439,000, or 0.01% of total loans, for the year ended December 31, 2020.

The following table shows additional and historical information regarding non-performing assets, early-stage delinquency (30-89 days delinquent), and troubled debt restructurings:

Nonperforming Assets

December 31, 2021 September 30, 2021 December 31, 2020

(dollars in thousands)

Total nonperforming $ 5,386 $ 5,851 $ 8,962 loans

Other real - - 1,820 estate owned

Total nonperforming $ 5,386 $ 5,851 $ 10,782 assets

Troubled debt restructurings ("TDRs"):

Non-performing (included in total $ 758 $ 767 $ 811 non-performing loans above)

Performing - - -

Total troubled debt $ 758 $ 767 $ 811 restructurings

Nonperforming loans/total 0.16 % 0.18 % 0.28 %loans

Nonperforming assets/total 0.11 % 0.13 % 0.27 %assets

TDRs/total 0.02 % 0.02 % 0.03 %loans



Additional Asset Quality Indicators

December 31, 2021 September 30, 2021 December 31, 2020

Delinquent loans 30-89 0.32 % 0.54 % 0.72 %days past due/ total loans

Quarterly net recoveries (charge-offs)/ 0.00 % 0.01 % 0.02 %total loans (annualized)

Year to date net recoveries 0.00 % 0.00 % (0.01) %(charge-offs)/ total loans

Allowance for credit losses/ 640.48 % 602.14 % 401.88 %nonperforming loans

Allowance for credit losses/ 1.05 % 1.09 % 1.19 %total loans ex. PPP loans

Income Taxes

The Company's effective tax rate was 26.5% for the quarter ended December 31, 2021, as compared to 25.7% for the quarter ended September 30, 2021. For the year ended December 31, 2021, the Company's effective tax rate was 26.1%, as compared to 26.3% for the year ended December 31, 2020.

Dividend and Capital

On January 24, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.64 per share, which is payable on February 24, 2022, to shareholders of record as of the close of business on February 10, 2022. This represents an increase of $0.03, or 5%, as compared to the $0.61 dividend paid in the fourth quarter of 2021. The Company did not repurchase any shares under its previously announced share repurchase program during the three months and year ended December 31, 2021.

The Company's ratio of tangible common equity to tangible assets decreased to 7.92% at December 31, 2021, from 8.42% at September 30, 2021, primarily due to strong asset growth during the quarter ended December 31, 2021.

Tangible common equity to tangible assets, excluding PPP loans, decreased to 7.96% at December 31, 2021, as compared to 8.53% at September 30, 2021.

Tangible book value per share increased by $1.47, or 2.7%, to $55.01 at December 31, 2021, as compared to $53.54 at September 30, 2021.

Investor Conference Call and Investor Presentation

An investor presentation is available on the investor relations section of the Company's website: http://ir.cambridgetrust.com or within the hyperlink provided below. This presentation includes additional details regarding the Company's loan portfolio, liquidity position, and other financial disclosures. Click here to download.

Cambridge Bancorp will also conduct a conference call/webcast at 11:00 a.m. Eastern Time on Tuesday, January 25, 2022, to discuss the results for the quarter. Participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10161776/ef779b0eb0.

Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email. Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of the Company's website at http://ir.cambridgetrust.com.

Those parties who do not have Internet access or are otherwise unable to pre-register for this event may still participate at the above time by dialing 1-866-777-2509 and asking the operator to join the Cambridge Bancorp (CATC) earnings call. Participants are requested to dial-in a few minutes before the scheduled start of the call. The webcast will be archived for three months on our investor relations website at https://ir.cambridgetrust.com/news-market-information/presentations/default.aspx.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 131-year-old Massachusetts chartered commercial bank with approximately $4.9 billion in assets at December 31, 2021, and a total of 19 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England's leaders in private banking and wealth management with $4.9 billion in client assets under management and administration at December 31, 2021. The Wealth Management group maintains offices in Boston and Wellesley, Massachusetts and Concord, Manchester, and Portsmouth, New Hampshire.

The accompanying unaudited condensed interim and annual consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K, which is posted in the investor relations section of the Company's website at http://ir.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements about the Company and its industry involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company's future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, the impact of any laws or regulations applicable to the Company, and measures being taken in response to the COVID-19 pandemic and the impact of the COVID-19 pandemic on the Company's business are forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following: the current global economic uncertainty and economic conditions being less favorable than expected; disruptions to the credit and financial markets; changes in the Company's accounting policies or in accounting standards; weakness in the real estate market; legislative, regulatory, or accounting changes that adversely affect the Company's business and/or competitive position; the Dodd-Frank Act's consumer protection regulations; the duration and scope of the COVID-19 pandemic and its impact on levels of consumer confidence; actions that governments, businesses and individuals take in response to the COVID-19 pandemic; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; a prolonged resurgence in the severity of the COVID-19 pandemic due to variants and mutations of the virus; the pace of recovery when the COVID-19 pandemic subsides; challenges from the integration of the Company and Wellesley resulting in the combined business not operating as effectively as expected; disruptions in the Company's ability to access the capital markets; the cost savings of the merger with Wellesley may not be fully realized or may take longer to realize than expected; operating costs, customer loss, and business disruption following the merger with Wellesley, including adverse effects on relationships with employees, may be greater than expected; and other factors that are described in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year end December 31, 2020, which the Company filed on March 15, 2021. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. You are cautioned not to place undue reliance on these forward-looking statements.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This information includes operating net income and operating diluted earnings per share, tangible book value per share and the tangible common equity ratio (including and excluding PPP loans), operating return on average assets, operating return on tangible common equity, operating efficiency ratio, and operating pre-tax pre-provision income and operating return on average assets.

Operating net income and operating diluted earnings per share exclude items that management believes are unrelated to its core banking business such as merger and acquisition expenses, gain (loss) on disposition of investment securities, and other items. The Company's management uses operating net income and operating diluted earnings per share to measure the strength of the Company's core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses.

Management also supplements its evaluation of financial performance with an analysis of tangible book value per share (which is computed by dividing shareholders' equity less goodwill and acquisition related intangible assets, or "tangible common equity," by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets, defined as total assets less goodwill and acquisition related intangibles), return on average assets and return on tangible common equity on an operating basis, the operating efficiency ratio (which is computed by dividing noninterest expense adjusted for non-operating expenses and total revenue adjusted for gain/(loss) on disposition of investment securities), operating pre-tax pre-provision income over average assets (which is computed by dividing income before taxes adjusted for the provision for (release of) credit losses, non-operating expenses, and gain/(loss) on disposition of investment securities over average assets). The Company has included information on these non-GAAP financial measures because the Company believes that investors may find it useful to have access to the same analytical tool used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be non-operating and excludes when computing these non-GAAP measures can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP performance measures are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented under "GAAP to Non-GAAP Reconciliations."

CONTACT:Cambridge BancorpMichael F. CarotenutoChief Financial Officer617-520-5520





CAMBRIDGE BANCORP AND SUBSIDIARIES

QUARTERLY UNAUDITED RESULTS



Three Months Ended Twelve Months Ended

December 31, September 30,December 31, December 31,

2021 2021 2020 2021 2020

(dollars in thousands, except per share data)

Interest and $33,511 $33,654 $35,870 $133,514 $129,378 Dividend Income

Interest Expense 1,738 1,233 1,789 5,533 9,145

Net Interest and Dividend 31,773 32,421 34,081 127,981 120,233 Income

Provision for (Release of) for (273) 86 (120) (1,294) 18,310 Credit Losses

Noninterest 11,454 11,115 10,802 44,324 39,525 Income

Noninterest 25,468 25,524 27,127 100,484 98,085 Expense

Income Before 18,032 17,926 17,876 73,115 43,363 Income Taxes

Income Tax 4,770 4,607 4,862 19,091 11,404 Expense

Net Income $13,262 $13,319 $13,014 $54,024 $31,959



Operating Net $13,501 $13,887 $14,353 $54,828 $43,870 Income*



Data Per Common Share:

Basic Earnings $1.90 $1.91 $1.88 $7.76 $5.07 Per Share

Diluted Earnings Per 1.88 1.89 1.86 7.69 5.03 Share

Operating Diluted Earnings 1.92 1.97 2.05 7.81 6.90 Per Share*

Dividends Declared Per 0.61 0.61 0.53 2.38 2.12 Share

Average Common Shares Outstanding:

Basic 6,934,702 6,932,882 6,897,450 6,926,257 6,289,481

Diluted 7,007,761 6,999,773 6,970,542 6,990,603 6,344,409



Selected Performance Ratios:

Net Interest 2.84 % 3.10 % 3.67 % 3.12 % 3.65 %Margin, FTE

Adjusted Net Interest Margin, 2.70 % 2.92 % 3.27 % 2.93 % 3.36 %FTE

Cost of Funds 0.15 % 0.12 % 0.19 % 0.13 % 0.28 %

Cost of Interest-Bearing 0.24 % 0.18 % 0.29 % 0.21 % 0.41 %Liabilities

Cost of 0.15 % 0.11 % 0.17 % 0.13 % 0.25 %Deposits

Cost of Deposits excluding 0.15 % 0.11 % 0.15 % 0.13 % 0.23 %Wholesale Deposits

Return on 1.12 % 1.20 % 1.31 % 1.24 % 0.91 %Average Assets

Return on 12.24 % 12.47 % 13.05 % 12.93 % 9.09 %Average Equity

Efficiency 58.92 % 58.63 % 60.44 % 58.32 % 61.40 %Ratio*

Operating Return on 1.15 % 1.25 % 1.45 % 1.26 % 1.25 %Average Assets*

Operating Return on 14.27 % 14.92 % 16.70 % 15.10 % 14.38 %Tangible Common Equity*

Operating Efficiency 58.15 % 56.82 % 56.37 % 57.67 % 56.66 %Ratio*





December 31, September 30,December 31,

2021 2021 2020

(dollars in thousands, except per share data)

Total Assets $4,891,544 $4,483,567 $3,949,297

Total Loans 3,319,106 3,300,918 3,153,648

Total Deposits 4,331,152 3,934,846 3,403,083

Allowance for 34,496 35,231 36,016 Credit Losses

Allowance to Total Loans (ex. 1.05 % 1.09 % 1.19 % PPP Loans)

Non-Performing 5,386 5,851 8,962 Loans

Non-Performing Loans/Total 0.16 % 0.18 % 0.28 % Loans

QTD Net Recoveries (Charge-offs) to 0.00 % 0.01 % 0.02 % Total Loans (annualized)

Tangible Common 7.92 % 8.42 % 8.91 % Equity Ratio*

Tangible Common Equity Ratio 7.96 % 8.53 % 9.20 % (ex. PPP Loans)*

Book Value Per $62.83 $61.38 $58.00 Share

Tangible Book $55.01 $53.54 $50.07 Value Per Share*

Wealth $4,656,183 $4,324,400 $3,994,152 Management AUM

Wealth Management AUM &$4,853,119 $4,506,174 $4,167,903 AUA

* See GAAP to Non-GAAP Reconciliations







CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS



December 31,September 30,December 31, 2021 2021 2020

(dollars in thousands, except par value)

Assets

Cash and cash equivalents $180,153 $ 93,477 $75,785

Investment securities

Available for sale, at fair value (amortized cost $201,270, 197,803 210,993 237,030 $211,900, and $234,252, respectively)

Held to maturity, at amortized cost (fair value $971,092, 977,061 666,322 247,672 $668,640, and $260,139, respectively)

Total investment securities 1,174,864 877,315 484,702

Loans held for sale, at lower of 1,490 - 6,909 cost or fair value

Loans

Residential mortgage 1,415,079 1,381,413 1,298,868

Commercial mortgage 1,511,002 1,474,694 1,358,962

Home equity 87,960 90,697 106,194

Commercial and industrial 269,446 315,904 347,855

Consumer 35,619 38,210 41,769

Total loans 3,319,106 3,300,918 3,153,648

Less: allowance for credit losses (34,496) (35,231) (36,016) on loans

Net loans 3,284,610 3,265,687 3,117,632

Federal Home Loan Bank of Boston 4,816 4,816 5,734 Stock, at cost

Bank owned life insurance 46,970 46,773 46,169

Banking premises and equipment, 17,326 17,266 18,158 net

Right-of-use asset operating 31,273 31,639 34,927 leases

Deferred income taxes, net 9,985 10,834 11,639

Accrued interest receivable 9,162 8,895 9,514

Goodwill 51,912 51,912 51,912

Merger-related intangibles, net 2,617 2,707 2,977

Other assets 76,366 72,246 83,239

Total assets $4,891,544$ 4,483,567$3,949,297

Liabilities

Deposits

Demand $1,393,935$ 1,281,881$1,006,132

Interest-bearing checking 763,188 682,675 625,650

Money market 1,104,238 841,641 532,218

Savings 907,722 937,565 984,262

Certificates of deposit 162,069 191,084 254,821

Total deposits 4,331,152 3,934,846 3,403,083

Borrowings 16,510 16,878 32,992

Operating lease liabilities 33,871 34,341 37,448

Other liabilities 72,174 69,925 74,042

Total liabilities 4,453,707 4,055,990 3,547,565

Shareholders' Equity

Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,968,192 shares, 6,968 6,966 6,927 6,965,871 shares, and 6,926,728 shares, respectively

Additional paid-in capital 229,205 228,694 226,967

Retained earnings 202,874 193,861 165,404

Accumulated other comprehensive (1,210) (1,944) 2,434 income (loss)

Total shareholders' equity 437,837 427,577 401,732

Total liabilities and $4,891,544$ 4,483,567$3,949,297shareholders' equity







CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME



Three Months Ended Twelve Months Ended

December 31,September 30,December 31,December 31,December 31, 2021 2021 2020 2021 2020

(dollars in thousands, except share data)

Interest and dividend income

Interest on $29,044 $ 30,093 $33,510 $120,019 $119,447 taxable loans

Interest on tax-exempt 355 353 229 1,205 880 loans

Interest on taxable 3,354 2,502 1,399 9,464 6,048 investment securities

Interest on tax-exempt 668 671 658 2,630 2,485 investment securities

Dividends on FHLB of 27 7 51 46 331 Boston stock

Interest on overnight 63 28 23 150 187 investments

Total interest and 33,511 33,654 35,870 133,514 129,378 dividend income

Interest expense

Interest on 1,607 1,086 1,416 4,974 7,295 deposits

Interest on borrowed 131 147 182 559 1,406 funds

Interest on subordinated - - 191 - 444 debt

Total interest 1,738 1,233 1,789 5,533 9,145 expense

Net interest and dividend 31,773 32,421 34,081 127,981 120,233 income

Provision for (release of) (273) 86 (120) (1,294) 18,310 credit losses

Net interest and dividend income after 32,046 32,335 34,201 129,275 101,923 provision for (release of) credit losses

Noninterest income

Wealth management 9,025 9,238 8,064 35,037 29,751 revenue

Deposit 519 462 506 1,939 2,595 account fees

ATM/Debit 423 406 362 1,567 1,308 card income

Bank owned life 197 199 221 801 747 insurance income

Gain on disposition - - - - 69 of investment securities

Gain on loans 53 45 666 832 1,850 sold

Loan related derivative 496 390 342 2,124 1,479 income

Other income 741 375 641 2,024 1,726

Total noninterest 11,454 11,115 10,802 44,324 39,525 income

Noninterest expense

Salaries and employee 16,215 16,404 16,673 65,127 58,975 benefits

Occupancy and 3,516 3,303 3,583 13,898 13,004 equipment

Data 2,564 2,052 2,061 8,829 7,662 processing

Professional 1,354 1,468 1,081 5,391 4,190 services

Marketing 512 608 655 2,536 1,818

FDIC 416 305 182 1,318 992 insurance

Non-operating 331 787 1,825 1,118 7,612 expenses

Other 560 597 1,067 2,267 3,832 expenses

Total noninterest 25,468 25,524 27,127 100,484 98,085 expense

Income before 18,032 17,926 17,876 73,115 43,363 income taxes

Income tax 4,770 4,607 4,862 19,091 11,404 expense

Net income $13,262 $ 13,319 $13,014 $54,024 $31,959

Share data:

Weighted average shares 6,934,702 6,932,882 6,897,450 6,926,257 6,289,481outstanding, basic

Weighted average shares 7,007,761 6,999,773 6,970,542 6,990,603 6,344,409outstanding, diluted

Basic earnings per $1.90 $ 1.91 $1.88 $7.76 $5.07 share

Diluted earnings per $1.88 $ 1.89 $1.86 $7.69 $5.03 share







CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS



Three Months Ended

December 31, 2021 September 30, 2021 December 31, 2020

Interest Rate Interest Rate Interest Rate Average Income/ Earned/Average Income/ Earned/Average Income/ Earned/ Balance Expenses ^Paid ^ Balance Expenses ^Paid ^ Balance Expenses ^Paid ^ (1) (1) (1) (1) (1) (1)

(dollars in thousands)

ASSETS

Interest-earning assets

Loans ^(2)

Taxable $3,231,227$29,044 3.57%$3,242,476$30,093 3.68%$3,174,185$33,510 4.20%

Tax-exempt 46,152 448 3.85 45,228 448 3.93 26,413 290 4.37

Securities available for sale ^(3)

Taxable 207,207 613 1.17 213,542 660 1.23 167,583 596 1.41

Securities held to maturity

Taxable 704,880 2,741 1.54 459,940 1,842 1.59 135,764 803 2.35

Tax-exempt 105,731 845 3.17 105,672 850 3.19 100,464 833 3.30

Cash and cash 174,088 63 0.14 113,511 28 0.10 106,449 23 0.09 equivalents

Total interest-earning 4,469,285 33,754 3.00% 4,180,369 33,921 3.22% 3,710,858 36,055 3.87% assets ^(4)

Non-interest-earning 243,647 252,201 272,011 assets

Allowance for credit (35,108) (35,302) (35,828) losses

Total assets $4,677,824 $4,397,268 $3,947,041

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

Checking accounts $712,123 $67 0.04%$685,731 $63 0.04%$638,847 $150 0.09%

Savings accounts 942,118 218 0.09 949,487 198 0.08 980,172 581 0.24

Money market 969,233 1,152 0.47 794,081 613 0.31 498,483 443 0.35 accounts

Certificates of 177,960 170 0.38 201,944 212 0.42 285,694 242 0.34 deposit

Total interest-bearing 2,801,434 1,607 0.23 2,631,243 1,086 0.16 2,403,196 1,416 0.23 deposits

Subordinated debt - - - - - - 8,346 191 9.10

Other borrowed funds 16,636 131 3.12 17,005 147 3.43 52,106 182 1.39

Total interest-bearing 2,818,070 1,738 0.24% 2,648,248 1,233 0.18% 2,463,648 1,789 0.29% liabilities

Non-interest-bearing liabilities

Demand deposits 1,324,162 1,219,288 971,837

Other liabilities 105,698 105,846 114,749

Total liabilities 4,247,930 3,973,382 3,550,234

Shareholders' equity 429,894 423,886 396,807

Total liabilities & shareholders' $4,677,824 $4,397,268 $3,947,041 equity

Net interest income on a fully taxable 32,016 32,688 34,266 equivalent basis

Less taxable equivalent (270) (274) (236) adjustment

Net interest income $31,746 $32,414 $34,030

Net interest spread 2.76% 3.04% 3.58%^(5)

Net interest margin 2.84% 3.10% 3.67%^(6)

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2021 and 2020.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Average balances of securities available for sale calculated utilizing amortized cost.

(4) Federal Home Loan Bank stock balance is excluded from interest-earning assets and associated dividend income is excluded from interest income.

Net interest spread represents the difference between the weighted average(5) yield on interest-earning assets, inclusive of PPP loans originated during 2020 and 2021, and the weighted average cost of interest-bearing liabilities.

Net interest margin represents net interest income on a fully tax(6) equivalent basis as a percentage of average interest-earning assets, inclusive of PPP loans originated during 2020 and 2021.







CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS



Year Ended

December 31, 2021 December 31, 2020

Interest Rate Interest Rate Average Income/ Earned/Average Income/ Earned/ Balance Expenses^ Paid ^ Balance Expenses^ Paid ^ (1) (1) (1) (1)

(dollars in thousands)

ASSETS

Interest-earning assets

Loans ^(2)

Taxable $3,203,126$120,0193.75%$2,832,796$119,4474.22%

Tax-exempt 37,750 1,525 4.04 23,835 1,115 4.68

Securities available for sale ^(3)

Taxable 217,096 2,617 1.21 136,776 2,337 1.71

Securities held to maturity

Taxable 424,499 6,847 1.61 152,789 3,711 2.43

Tax-exempt 104,114 3,329 3.20 89,841 3,145 3.50

Cash and cash 141,278 150 0.11 69,783 187 0.27 equivalents

Total interest-earning 4,127,863 134,4873.26% 3,305,820 129,9423.93%assets ^(4)

Non-interest-earning 251,652 245,316 assets

Allowance for credit (35,642) (27,887) losses

Total assets $4,343,873 $3,523,249

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

Checking accounts $675,753 $265 0.04%$554,000 $682 0.12%

Savings accounts 957,039 861 0.09 937,247 3,378 0.36

Money market accounts 765,021 2,769 0.36 350,117 1,277 0.36

Certificates of deposit 209,311 1,079 0.52 259,568 1,958 0.75

Total interest-bearing 2,607,124 4,974 0.19% 2,100,932 7,295 0.35%deposits

Subordinated debt - - - 5,408 444 8.21

Other borrowed funds 18,466 559 3.03 123,693 1,406 1.14

Total interest-bearing 2,625,590 5,533 0.21% 2,230,033 9,145 0.41%liabilities

Non-interest-bearing liabilities

Demand deposits 1,197,056 838,653

Other liabilities 103,459 103,086

Total liabilities 3,926,105 3,171,772

Shareholders' equity 417,768 351,477

Total liabilities & $4,343,873 $3,523,249 shareholders' equity

Net interest income on a fully taxable equivalent 128,954 120,797 basis

Less taxable equivalent (1,019) (895) adjustment

Net interest income $127,935 $119,902

Net interest spread ^ 3.05% 3.52%(5)

Net interest margin ^ 3.12% 3.65%(6)

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2021 and 2020.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Average balances of securities available for sale calculated utilizing amortized cost.

(4) Federal Home Loan Bank stock balance is excluded from interest-earning assets and associated dividend income is excluded from interest income.

Net interest spread represents the difference between the weighted average(5) yield on interest-earning assets, inclusive of PPP loans originated during 2020 and 2021, and the weighted average cost of interest-bearing liabilities.

Net interest margin represents net interest income on a fully tax(6) equivalent basis as a percentage of average interest-earning assets, inclusive of PPP loans originated during 2020 and 2021.

GAAP to Non-GAAP Reconciliations(dollars in thousands except per share data)

Statement on Non-GAAP Measures: The Company believes the presentation of the following non-GAAP financial measures provides useful supplemental information that is essential to an investor's proper understanding of the results of operations and financial condition of the Company. Management uses non-GAAP financial measures in its analysis of the Company's performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Three Months Ended Twelve Months Ended

Operating Net Income / Operating December 31,September 30,December 31,December 31,December 31,Diluted 2021 2021 2020 2021 2020 Earnings Per Share

(dollars in thousands, except share data)

Net Income (a$13,262 $ 13,319 $13,014 $54,024 $31,959 GAAP measure)

Add: Merger - - 581 - 6,368 expenses

Add: Gain on disposition - - - - (69) of investment securities

Add: Provision established - - - - 8,638 for acquired Wellesley loans

Add: Branch and office - 787 1,244 787 1,244 closure expenses

Add: Wealth management system 331 - - 331 - conversion costs

Tax effect of non-operating (92) (219) (486) (314) (4,270) adjustments ^ (1)

Operating Net Income (a $13,501 $ 13,887 $14,353 $54,828 $43,870 non-GAAP measure)

Less: Dividends and Undistributed Earnings (61) (65) (63) (252) (64) Allocated to Participating Securities (GAAP)

Operating Income Applicable to Common $13,440 $ 13,822 $14,290 $54,576 $43,806 Shareholders (a non-GAAP measure)

Weighted Average 7,007,761 6,999,773 6,970,542 6,990,603 6,344,409Diluted Shares

Operating Diluted Earnings Per $1.92 $ 1.97 $2.05 $7.81 $6.90 Share (a non-GAAP measure)

The net tax benefit associated with non-operating items is determined by assessing whether each non-operating item is included or excluded from net(1) taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income. The tax effect for prior quarters may have been updated to reflect the final tax deductibility.

December 31, 2021September 30, 2021December 31, 2020

(dollars in thousands)

Tangible Common Equity:

Shareholders' $437,837 $427,577 $401,732 equity (GAAP)

Less: Goodwill and acquisition related (54,529) (54,619) (54,889) intangibles (GAAP)

Tangible Common Equity (a non-GAAP $383,308 $372,958 $346,843 measure)

Total assets (GAAP)$4,891,544 $4,483,567 $3,949,297

Less: Goodwill and acquisition related (54,529) (54,619) (54,889) intangibles (GAAP)

Tangible assets (a $4,837,015 $4,428,948 $3,894,408 non-GAAP measure)

Tangible Common Equity Ratio (a 7.92 % 8.42 % 8.91 %non-GAAP measure)



Tangible Common Equity (excluding PPP loans):

Tangible Common Equity (a non-GAAP $383,308 $372,958 $346,843 measure)

Tangible assets (a $4,837,015 $4,428,948 $3,894,408 non-GAAP measure)

Less: PPP loans (22,228) (58,767) (124,201)

Tangible assets (excluding PPP Loans) (a non-GAAP $4,814,787 $4,370,181 $3,770,207 measure)

Tangible Common Equity Ratio (excluding PPP 7.96 % 8.53 % 9.20 %Loans) (a non-GAAP measure)



Tangible Book Value Per Share:

Tangible Common Equity (a non-GAAP $383,308 $372,958 $346,843 measure)

Common shares 6,968,192 6,965,871 6,926,728 outstanding

Tangible Book Value Per Share (a $55.01 $53.54 $50.07 non-GAAP measure)







Three Months Ended Twelve Months Ended

December 31, September 30,December 31, December 31, December 31, 2021 2021 2020 2021 2020

(dollars in thousands)

Efficiency Ratio: (1)

Noninterest$25,468 $25,524 $27,127 $100,484 $98,085 expense

Net interest and $31,773 $32,421 $34,081 $127,981 $120,233 dividend income

Total noninterest 11,454 11,115 10,802 44,324 39,525 income

Total $43,227 $43,536 $44,883 $172,305 $159,758 revenue

Efficiency 58.92 % 58.63 % 60.44 % 58.32 % 61.40 %Ratio



Operating Efficiency Ratio: (2)

Noninterest$25,468 $25,524 $27,127 $100,484 $98,085 expense

Merger expenses - - (581) - (6,368) (Pretax)

Branch and office closure - (787) (1,244) (787) (1,244) expenses (Pretax)

Wealth management system (331) - - (331) - conversion costs (Pretax)

Operating expense (a $25,137 $24,737 $25,302 $99,366 $90,473 non-GAAP measure)

Total $43,227 $43,536 $44,883 $172,305 $159,758 revenue

Add: Gain on disposition of - - - - (69) investment securities

Operating revenue (a $43,227 $43,536 $44,883 $172,305 $159,689 non-GAAP measure)

Operating Efficiency Ratio (a 58.15 % 56.82 % 56.37 % 57.67 % 56.66 %non-GAAP measure)







Three Months Ended Twelve Months Ended

December 31, September 30,December 31, December 31, December 31, 2021 2021 2020 2021 2020

(dollars in thousands)

Operating Return on Tangible Common Equity: (3)

Operating Net Income $13,501 $13,887 $14,353 $54,828 $43,870 (a non-GAAP measure)

Average common $429,894 $423,886 $396,807 $417,768 $351,477 equity

Average goodwill and merger (54,574) (54,659) (54,941) (54,707) (46,476) related intangibles

Average tangible common $375,320 $369,227 $341,866 $363,061 $305,001 equity (a non-GAAP measure)

Operating Return on Tangible Common 14.27 % 14.92 % 16.70 % 15.10 % 14.38 %Equity (a non-GAAP measure)



Operating Return on Average Assets: (4)

Operating Net Income $13,501 $13,887 $14,353 $54,828 $43,870 (a non-GAAP measure)

Average $4,677,824 $4,397,268 $3,947,041 $4,343,873 $3,523,249 assets

Operating Return on Average 1.15 % 1.25 % 1.45 % 1.26 % 1.25 %Assets (a non-GAAP measure)







Three Months Ended Twelve Months Ended

December 31, September 30,December 31, December 31, December 31, 2021 2021 2020 2021 2020

(dollars in thousands)

Operating Pre-Tax Pre-Provision (PTPP) Income (5)

Income before income taxes $18,032 $17,926 $17,876 $73,115 $43,363 (GAAP)

Add: Provision for (Release of) (273) 86 (120) (1,294) 18,310 credit losses (GAAP)

Add: Non-operating 331 787 1,825 1,118 7,612 expenses (GAAP)

Add: Gain on disposition of investment - - - - (69) securities (GAAP)

Operating PTPP Income $18,090 $18,799 $19,581 $72,939 $69,216 (a non-GAAP measure)

Average 4,677,824 4,397,268 3,947,041 4,343,873 3,523,249 assets

Operating PTPP Return on Average 1.53 % 1.70 % 1.97 % 1.68 % 1.96 %Assets (a non-GAAP measure)

(1) The efficiency ratio represents noninterest expense as a percentage of the sum of net interest and dividend income and noninterest income.

(2) Operating efficiency ratio represents operating expense as a percentage of operating revenue.

(3) Operating return on tangible common equity represents operating net income as a percentage of average tangible common equity.

(4) Operating return on average assets represents operating net income as a percentage of average assets.

Operating Pre-Tax Pre-Provision ("PTPP") Income represents income before(5) income taxes adjusted for the provision for (release of) credit losses, non-operating expenses, and gain on disposition of investment securities as a percentage of average assets.

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SOURCE Cambridge Bancorp